The world’s largest peer-to-peer platform is preparing to raise over $500 million from a US initial public offering that will represent the first in the world of alternative finance. Morgan Stanley and Goldman Sachs have been chosen to lead the offering, which some have suggested could arrive as early as Q3 this year. The foremost p2p platform will be seeking a valuation of roughly $5 billion when it lists. As recently as April 2014 the company was valued at $3.76 billion after an equity fundraising round. The platform was valued at just $2.3 billion in November 2013. It’s not unrealistic for the valuation sought by Lending Club to soar beyond $5 billion, particularly in light of booming valuations for technology-based IPOs worldwide.
We asked Peter Renton, Founder of Lend Academy, for his thoughts on the valuation and the potential impact of the IPO:
"Many people might look at Lending Club's $5 billion expected IPO valuation and claim it is a bit of a stretch for a company that did just $100 million in revenue in 2013. But Lending Club has the potential to be a major player in financial services in the 21st century. They have been growing fast for many years and if they can continue to execute well and maintain that growth into the future the valuation will certainly be justified."
"I think it is hard to overstate the importance of the Lending Club IPO to the p2p lending industry. One of the biggest challenges we still face as an industry is a lack of awareness. The Lending Club IPO is a story that will be covered by all the major media outlets furthering awareness of this industry more than any other event in its history. A successful IPO will help the industry worldwide as investors, borrowers and venture capitalists all become more comfortable with the business model of p2p lending."
Matt Burton, CEO of Orchard Platform, also weighed in on the news:
"We’re incredibly excited about the Lending Club IPO. It’s a testament to the legitimacy of marketplace lending and the massive potential that we’re beginning to see unfold. The biggest hurdle in the space has been educating borrowers and lenders alike and I think that the media coverage around the public offering will really help to tell that part of the story."
Lending Club has grown phenomenally quickly since its inception in 2007, having now originated upwards of $4 billion in loans. Prosper is the only other platform in the world even to have crossed the $1 billion mark. It is believed that close to 70% of all loans on the Lending Club platform are now rapidly filled by institutional investors using sophisticated computer trading strategies. The Lending Club IPO will not only represent a huge milestone for peer-to-peer lending, it will set a benchmark for future IPOs within the sector.
